Costco Shares Tumble on Disappointing Sales

Reuters

Wednesday, 5 Sep 2007 | 10:34 AM ETReuters

SHARES

Damian Dovarganes

A Costco employee pulls shopping charts at a Costco Wholesale store.

Warehouse retailer Costco Wholesale reported weaker-than-expected August sales, which were hurt by lower gasoline prices, weaker tobacco demand and a decline in store traffic, and shares fell as much as 6 percent in early trading.

August sales in stores open at least a year rose 2 percent, well below analysts' expectations of 5.6 percent, as compiled by Reuters Estimates.

Costco said traffic was particularly weak in California where it operates more than 100 of its 518 warehouse clubs.

"We do believe that the extreme high temperatures in California impacted our traffic counts negatively in August and hopefully that will bounce back as we move forward," the company said on a recorded call.